US Stocks Gain on Monday
Wall Street was opened higher on Monday following earlier gains in Asia and Europe while oil prices recovered. The Dow Jones was up 192 points or 1.18%, the S&P 500 increased 1.25% and the Nasdaq gained 1.27% around 13 minutes after the open.
Why Bonds Aren’t Buying This Bounce, And Why Guggenheim Expects The 10-Year Yield To Drop Below 1%:
Global equities on the back of yet another short squeeze in crude, one asset class that has been roundly ignored are Treasurys, which have refused to follow the equity euphoria and have in fact round-tripped today’s entire risk on move, suggesting that once again, “bonds aren’t buying it.”
Even though the strengthening dollar was one of the greatest headwinds to growth last year, we take no comfort in the recent weakening of the currency. As our BofAML sentiment survey shows, investors have moved from considering China as the biggest risk in 2016 to fearing slower US growth. This shift has helped push any expectations of tightening well into the future, lowered the terminal rate, and further lowered inflation expectations.
Cited by Reuters, Minerd, said on Monday that he sees the 10-year Treasury note yield falling to 1 percent, perhaps even lower, before year-end.
Markets data 22 Feb.
US Factory Activity at 3-Year Low
The flash Markit manufacturing PMI for the United States came in at 51 in February of 2016, down from 52.4 in the previous month and below market expectations of 52.3. It is the lowest figure since November of 2012 due to softer rates of output, new business and employment growth while factory gate prices recorded the fastest drop since mid-2012.
Israel Keeps Key Rate at 0.1%
The Bank of Israel left its benchmark rate unchanged at 0.1 percent at its February 22nd 2016 meeting, as widely expected.
Chicago Fed National Activity Index Recovers
The Chicago Fed National Activity Index came in 0.28 in January of 2016, rebounding from a downwardly revised -0.34 in December and showing economic activity expanded above trend for the first time in six months.
European Stocks Recover
Markets in Europe traded sharply higher on Monday amid earlier gains in Asia and a recovery in commodity prices. The FTSE 100 was up 1.22%, the Dax increased 1.76%, the CAC 40 added 1.65%, the Ibex 35 gained 2.02% and the FTSE MIB rose 2.67%
British Pound Hits 7-Year Low
The British pound declined as much as 2.4 percent to $1.406 around 1 PM London time after London Mayor Boris Johnson said he would campaign for UK to leave the European Union in a June referendum. it is the lowest level against USD since March 2009.
Asian Stocks Finish Mostly Higher
Most Asian markets closed in the green on Monday, led by gains in Chinese shares amid a recovery in oil prices. The Shanghai Composite Index gained 2.35%, closing at its highest since the end of January and the Shenzhen composite went up 2 percent after news China replaced the head of its securities regulator. The decision improved investors confidence as the prior head has been under criticism for some policies and decisions markets believe contributed to the summer turmoil.
- The Nikkei 225 added 0.9% as the yen weakened slightly against the USD,
- the Hang Seng rose 0.93% and
- the S&P/ASX 200 closed 0.98% higher while the
- Kospi ended near the flatline.
UK Factory Orders at 4-Month Low
The Confederation of British Industry order book balance declined to -17 in February from -15 in the previous month, the lowest since October of 2015. External demand (export orders at -19 from -22) remained in negative territory and outlook worsened for output expectations (+11 from +14 in January), domestic price expectations (-3 from +1 in January) and stocks of finished goods (+12 from +13 in January).
Morocco Inflation Rate at 16-Month Low
Annual inflation in Morocco eased to 0.3 percent in January of 2016 from 0.6 percent in the preceding month, mainly due to falling prices of food (-0.2 percent from 1.1 percent in December) and transport (-0.4 percent from -2.9 percent in December).
Italy Inflation Rate Confirmed at 0.3% in January
Consumer prices increased by 0.3 percent year-on-year in January of 2016, following a 0.1 percent growth in the previous month and matching preliminary estimates. The speed up was mainly due to the reduction of the annual decrease of prices of nonr egulated energy products and rise of services related to transport.. On a monthly basis, consumer prices fell 0.2 percent, after showing no growth in December.
Euro Area Private Sector Growth at 13-Month Low
The flash Markit Composite PMI for the Eurozone came in at 52.7 in February of 2016, down from 53.6 in the previous month and below market expectations of 53.3. It is the lowest reading in 13 months as expansion in the services sector hit 13-month low and manufacturing growth was the weakest in 12 months.
German Private Sector Activity Growth at 7-Month Low
The flash Markit Germany Composite PMI came in at 53.8 in February of 2016, down from 54.5 in the previous month and the lowest since July of 2015. Manufacturing slowed to 15-month low (PMI at 50.2 from 52.3 in January) while services grew slightly (PMI at 55.1 from 55 in January). Service providers saw the fastest rise in new business for three months, but manufacturing new orders rose to the least extent since July 2015. Some manufacturers highlighted difficulties in securing orders from foreign clients, and new export business increased only marginally. Also, job creation slowed to the weakest since April last year. Input cost fell further while output cost increased.
France Manufacturing Activity Edges Up
The flash Markit France Manufacturing PMI came in at 50.3 in February of 2016, slightly up from 50 in the previous month and above market expectations of 49.9. Output fell for the first time since August 2015, new orders declined for the second successive month and input prices recorded the sharpest drop in costs for one year amid lower prices for key raw materials while employment edged up.
Danish Retail Sales Up 0.3% YoY in January
Retail sales in Denmark increased by 0.30 percent year-on-year in January of 2016, following a downwardly revised 0.1 percent drop in a month earlier. In January 2015, the index grew by 2.4 percent. On a month-on-month basis, retail sales rose 0.5 percent, as compared to a 0.8 percent fall in December 2015.
French Private Sector Activity at 13-Month Low
The flash reading for the Markit France Composite PMI came in at 49.8 in February of 2016, down from 50.2 in the previous month pointing to the first contraction since January of 2015. New business subindex decreased for a first time in six months and outstanding business fell for the first time in 15 months. Employment went up for the second month while input prices showed slight rise and output prices fell the most in 12 months. The Manufacturing PMI came in at 50.3 in February of 2016, slightly up from 50 in the previous month while Services PMI declined to 49.8 from 50.3 in January.